Ancient INDIAN ECONOMY Prof. Varadraj Bapat World GDP during 0 CE - - PowerPoint PPT Presentation

Ancient INDIAN ECONOMY

• Prof. Varadraj Bapat

World GDP during 0 CE

Year 0 CE Total Western Europe 10.8 Eastern Europe 1.9 Former USSR 1.5 Total Western offshoots 0.5 Total Latin America 2.2 Japan 1.2 China 26.2 India 32.9 Other Asia 16.1 Total Asia (excluding Japan) 75.1 Africa 6.8 World 100

India alone was contributing almost one- third of the Global GDP

Source: Maddison, Angus, The World Economy – A Millennial Perspective, 1st Indian Ed., Overseas Press (India) Private Limited, New Delhi, 2003

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What do these figures tell you about the Indian Economy?

Share of Countries/Regions in World GDP (0 CE)

World GDP during 0 CE

• Superior economic performance of India
• Strong fundamentals including high levels of skills

and talented citizens

• Well – developed economic status
• High levels of performance of different sectors

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“China and India combined used to produce nearly half of the world’s economic output in 1820 compared to just 1.8% for the U.S.” (Michael Milken, Chairman of Milken Institute, The Wall street Journal, Tuesday, September 19, 2006- Opinion page article: ‘Seventh Decade-The Boom Generation)

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World GDP during 0 CE

Ancient Indian Economy

• Vital sectors that contribute to growth of economy:
• Agriculture and Food Production
• Industry
• Services/ Trade
• Other Critical Sectors:
• Education
• Science and Technology

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Ancient Indian Economy

• Agriculture

was the main

• ccupation

with crafts, manufacturing and trade following it

• Mostly village-based and the villages were largely self-

sustaining

• Well-developed cities with perfect planning
• Agriculture supplied the raw materials for textiles and

crafts

• Fine balance among different sectors
• Developed a scientific system for running the government

and managing economy

• Making wealth as the most important activity

Agriculture and Food Production

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• Rock Shelters of Bhimbetka humans lived throughout the

Upper Paleolithic (10th to 8th millennia BCE), revealing cave paintings dated to nearly 100,000 years; the Sivaliks and the Potwar (Pakistan) region also exhibit many vertebrate fossil remains and paleolithic tools.

• Jean-Francois Jarrige, the French excavator, noted that by

6000 BCE, Mehrgarh, one of India’s ancient settlements, had a veritable agricultural economy solidly established.

• Randhawa, an agricultural scientist, quoted that Indians

cultivated wheat, barley, peas, date palms and cotton, more than 4500 years ago

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Agriculture and Food Production

• Pereira, in his book Tending the Earth, mentioned
• Earliest sample of cotton cloth discovered in India was

in the ruins of Harappa around 5000 years ago.

• Evidence of rice cultivated in India goes back to 4300

years

• The Greek historian Megasthenese noted that the greater

part of soil was under irrigation

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• Diodorus Siculus, who visited India around the first century

BCE, mentioned about the fertility of lands and production

• f different varieties of cereals and fruits.
• Major General Alexander Walker who had served in the

East India Company, had noted that the Hindoos had developed superior tools and techniques in agriculture – Drill Plough, which had been in use in India from the remotest times, but is said to have been first used in Europe much later in 1662

Agriculture and Food Production

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• Western

agricultural scientists

• f

the 20th century mention as to how the Indian farmers used compost and

• rganic manure.
• Albert Howard, the noted agricultural scientist, regarded

the Indian farmers as ‘professors’ and “decided that he could not do better than watch their operations”

• Evidence from ancient texts from different regions of

India suggest that there was high level of agricultural productivity and production; No scarcity or famine

Agriculture and Food Production

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‘Cambridge Encyclopedia of India, Pakistan, Bangladesh and Srilanka’, 1989, says: “The whole of South India is dotted with tanks. A British expert writing in the 1850s estimated that the total number

• f such tanks in the Madras Presidency to be over 50,000.

Another estimate indicated that in the 18th century, there were more than 38,000 tanks in the region that later constituted the Mysore State. It is therefore, a fair estimate that there were over a lakh tanks in the whole of South India.”

Agriculture and Food Production

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• Eminent archaeologist Chhabra had noted that in the

ancient world, India was in the forefront in the field of shipbuilding.

• Basham, in his book, ‘The Wonder that was India’

mentions that that were different sizes of industries about 2300 years ago (Mauryan State).

• Kennedy, presented the shares of manufacturing output
• f different countries in the world during 1750 – India’s

share was almost 1/4th of the global output. (This is after, destruction during foreign rule of about 600 years)

Industry

• In 1750 India's share of World's Manufacturing Output

was 24.5% and that of the West (including America) 18.2%. By 1913 India's share dropped to 1.7% and the West's share increased to 81.6%. (Source: Paul Bairoch, "International Industrialization levels from 1750 to 1980", Journal of European Economic History, 11 (Fall 1982), P 269-334).

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Industry

Paul Bairoch confirms that India had a 25 per cent share of the global trade in textiles in the early 18th century. “The Main Trends in National Economic Disparities since the Industrial Revolution”, in P. Bairoch and M. Levy-Leboyer, eds, Disparities in Economic Development since the Industrial Revolution, Macmillan, New York, 1981.

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Industry

Industry

Relative Shares of World Manufacturing Output (1750)

Europe as a whole 23.2 United States 0.1 Japan 3.8 China 32.8 India 24.5

Source: Kennedy, Paul S., The Rise and Fall of the Great Powers – Economic Change and Military Conflict from 1500- 2000, Fonatana Press, London, 1988, p. 190.

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Trade

• Most important activity after agriculture and industry
• Signifies diversified economy
• Extended to many countries across the globe – sea trade
• Cotton textile and pepper export
• Massive favorable balance of trade (settled in Gold)
• Economic centre of the Indian Ocean region
• Major trading power

• Well developed Shipping Industry
• Banking
• The annual revenues of the Mogul emperor Aurangzeb

(1659-1701) are said to have amounted to $450,000,000, more than ten times those

• f

(his contemporary) Louis XIV. (John Kautsky, The Politics

• f

Aristocratic Empires, University of North Carolina Press, Chapel Hill, 1982, p. 188.)

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Services

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Education

• Traditional Indian system divided a person’s life into four

stages – Brahmacharya, the first stage was devoted to education

• Earliest documented university in Takshila, about 2700

years ago. Had more than 10,500 students pursuing studies in more than 60 different subjects

• India was the pioneer in higher education in the world
• Centre
• f higher

education. Several Universities like Takshila, Nalanda, Vikramsheela, Kashi

• Literacy rate was very high
• Education widespread; all castes communities
• Further centers include Odantapuri (from the Gupta

period to the to the Muslim conquest), Nagarjunakonda 800-1040), Sharada Peeth, in modern day period to the Arab raids), Kanchipuram, in Tamil Nadu, in Orissa. In Sri Lanka, Sunethradevi Pirivena founded circa 1415 AD.

• http://www.aicte-india.org/downloads/ancient.pdf

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Education

• Takshashila

/Taxila, in ancient India (modern- day Pakistan), was Hindu/Buddha centre of learning. It may have dated back to at least 500-1000 BC. The school consisted of several monasteries without large dormitories or lecture halls where the instruction was most likely provided on an individualistic basis/ small group.

• Takshashila

is described in some detail in later Jātaka tales, written in Sri Lanka around 500 AD.

• It became a noted centre of learning at least several

centuries BC, and continued to attract students until the destruction of the city in the fifth century AD.

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Education

• Takshashila

is perhaps best known because

• f

its association with Chanakya. The famous treatise Arthashastra (Sanskrit for The knowledge of Economics) by Chanakya, is composed in Takshashila. Chanakya (or Kautilya), the Maurya Emperor Chandragupta and the Ayurvedic healer Charaka studied at Taxila.

• Generally, a student entered Takshashila at the age of
• sixteen. The Vedas and the Eighteen Arts, which included

skills such as archery, hunting, and elephant lore, were taught, in addition to its law school, medical school, and school of military science

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Education

• Nalanda

was established in the fifth century AD in Bihar, India and survived until circa 1200 AD. It was devoted to Hindu/Buddha studies, and trained students in fine arts, medicine, mathematics, astronomy, politics and the art of war.

• It

had eight separate compounds, ten temples, meditation halls, classrooms, lakes and parks.

• It had a nine-story library where monks meticulously

copied books and documents so that individual scholars could have their own collections. Library of over 9 million manuscripts

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Education

• It had accommodation for 10,000 students and 2,000
• professors. Nalanda attracted students and scholars from

most parts of the world including Sri Lanka, Korea, Japan, China, Tibet, Indonesia, Persia and Turkey.

• At the beginning of the 12th Century, the Muslim invader

Bakhtiyar Khalji sacked the university. The whole library was burnt and most of the scholars/ students killed.

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Education

• Further centers include Varanasi in Uttar Pradesh,

Kanchipuram, in Tamil Nadu, Telhara in Bihar (probably

• lder than Nalanda), Odantapuri, in Bihar (circa 550 -

1040), Somapura, in Bangladesh (from the Gupta period to the Turkic Muslim conquest), Sharada Peeth, Kashmir, Jagaddala Mahavihara, in Bengal (from the Pala period to the Turkic Muslim conquest), NagarjunaKonda, in Andhra Pradesh, Vikramashila, in Bihar (circa 800- 1040), Valabhi, in Gujarat (from the Maitrak period to the Arab raids), Manyakheta, in Karnataka, Pushpagiri, Odisha (300 AD). Mahavihara, Abhayagiri Vihāra, and Jetavanaramaya, in Sri Lanka. The Academy

• f

Gundishapur, Ancient Persia.

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Education

Educational survey, by William Adam. there existed about 1,00,000 village schools in Bengal and Bihar around the 1830s. Thomas Munro, had observed that ‘every village had a school’. Observations made by Dr. G.W.Leitner in 1882 show that the spread of education in the Punjab around 1850 was of a similar extent. At about the same time, England had very few schools for the children of ordinary people till about 1800

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Education when Britishers arrived

• The education was taken by students of all

castes and religions, in all parts of India. Girls also were enrolled in good numbers.

• Adam’s

report: On average there were around 100 institutions of higher learning in each district of Bengal, and cosequently, he concluded that the 18 districts of Bengal had about 1,800 such institutions.”

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Education when Britishers arrived

According to this hard data, in terms of the content, the proportion

• f

those attending institutional school education in India in 1800 is certainly not inferior to what obtained in England then; and in many respects Indian schooling seems to have been much more

• extensive. The content of studies was better in India

than in England. The method of school teaching was superior in India at that time. The school attendance, especially in the district of Madras Presidency, even in the decayed state

• f

the period 1822-25, was proportionately far higher than the numbers in all variety of schools in England in 1800.

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Institutions of higher learning a total of 1,094 such places, in Madras Presidency. The largest number of these, 279, were in the district

• f Rajahmundry with a total of 1.454 scholars;

Coimbatore came 173 (724 scholars); Guntoor 171 (with 939 scholars); Tanjore 109 (with 769 scholars); Nellore 107; North Arcot 69 (with 418 scholars); Salem 53 (with 324 scholars); Chingleput 51 (with 398 scholars); Masulipatarn 49 (with 199 scholers); Bellary 23; Trichnopoly (with 131 scholars) and Malabar with one old institution with 75 scholars.

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• There is a sense of widespread neglect and decay

in the field of indigenous education within a few decades after the onset of British rule.

• Madras Presidency data (1822-25), the report of
• W. Adam on Bengal and Bihar (1835-38), and the

Punjab survey by G.W. Leitner.

• Dharampal, 2000. Introduction in The Beautiful

Tree, Volume III. Pp. 07-86. Mapusa: Other India Press.

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Science and Technology

• India pioneered innovations in various fields of

science

• Laid the foundations for modern science
• Albert Einstein, one of the greatest scientists of

the modern times, had noted: “We owe a lot to the Indians, who taught us how to count, without which no worthwhile scientific discovery could have been made.”

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• Quoting Teresi’s references to India, Shashi

Tharoor notes: “India invented modern numerals (known to the world as ‘Arabic’ numerals because the West got them from Arabs, who learned them from us!). It was an Indian who first conceived of the zero, shunya; the concept of nothingness, shunyata, integral to Hindu and Buddhist thinking, simply did not exist in the West.”

• Concept of infinite sets of rational numbers was

understood by Jain thinkers in the 6th century BC

Science and Technology

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• The Sulba Sutras, composed between 800 and 500 BC,

demonstrate that India had Pythagoras’ theorem before the great Greek was born, and a way of getting the square root of 2 correct to five decimal places

• Sushruta defined the function of the heart 2600 years
• ago. In the West, Harvey could do it only during the 17th
• century. It is said that Sushruta conducted surgeries

even in those days (Source: Pride of India, Samskrita Bharati, New Delhi, 2006)

Science and Technology

Ethics in Economics

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• Ancient society emphasized higher principles in business

and creating wealth

• Objective
• f

agriculture was not just high levels

• f

production, but the ultimate aim was to make food available to all

• Discipline of taking care encompassed not only human

beings, but also animals, birds, insects and all aspects of nature

• Emphasized significance of earning wealth through proper

methods in all possible ways

Ethics in Economics

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While discussing the structure of business in ancient India, Basham notes that the ancient Indian business functioned on higher ideals, even when making money was the objective. To quote: “Thus the ideals of ancient India, while not perhaps the same as those of the acquisitive West, by no means excluded money-making. India had not only a class of luxury- loving and pleasure-seeking dilettanti, but also one of wealth- seeking merchants and prosperous craftsmen, who, though less respected than the brahmans and warriors were honored in society.”

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Government and Business

• Codes of conduct and general rules regulating businesses:

Family–run business enterprises, Individually

• wned

business enterprises, Gana, Pani, Puga, Vrata, Samgha, Nigama, Sreni

• Well defined systems were in place. Evidences show that

there were arrangements in the society to take care of all the travellers, including those with merchandise

• Government and Society took joint responsibility with

regard to all travellers, including those with merchandise, in Bengal

Business and Trade

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• Indian system permitted interference of the government in

business, in the interests of the society

• Required traders and businessman to follow basic norms
• Any misuse or exploitation by the merchants and traders

was considered a serious and punishable offence. The testimony

• f

Megasthenes, corroborated by the Arthashastra, shows that in Mauryan times, prices were regulated by market officials

Character and Principles in Business and Trade

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• Conduct of Indians was appreciable and fair
• Marco Polo, praised the merchants of Lata, saying ‘you

must know that these Abraiaman are the best merchants in the World, and the most truthful, for they would not tell a lie for anything on earth,’ and ‘if a foreign merchant who does not know the ways of the country applies to them and entrusts his goods to him, they will take charge of these, and sell them in the most loyal manner, seeking zealously the profit of the foreigner and asking no commission except what he pleases to bestow.’

Superior Society backed by Economic Prosperity

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• Different sources present India as the most prosperous

economy with people of high calibre and superior qualities

• Indians have never tried to own their knowledge and

practices, as they believe everything is the sum total of the accumulated experiences of the society –Even after sister Nivedita compelled scientist J.C.Bose, he refused to get a patent for his discovery. With the result, Marconi was identified with wireless communication, till it was proved

• therwise after so many years

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Noted American author, Sunderland had underlined the prosperity of India at the time of the arrival of the British in the following words: “This wealth was created by the Hindus’ vast and varied industries…India was a far greater industrial and manufacturing nation than any in Europe or than any other in Asia…Such was the India which the British found when they came.”

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Dadabhai Naoroji was the first man to say that internal factors were not the reasons of poverty in India but poverty was caused by the colonial rule that was draining the wealth and prosperity of India. The drain of wealth was the portion of India’s wealth and economy that was not available to Indians. The Drain of Wealth theory was systemically initiated by Dadabhai Naoroji in 1867 and further analysed and developed by R.C. Dutt, M.G Ranade etc In 1867, Dadabhai Naoroji put forward the ‘drain of wealth’ theory in which he stated that the Britain was completely draining India. He mentioned this theory in his book Poverty and Un-British Rule in India. He put forward the idea that Britain was draining and bleeding India.”

Drain of Wealth by British

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Further in his book , he stated the loss of 200-300 million pounds of revenue to Britain. Dadabhai Naoroji considered it as a major evil of British in India. Naoroji observed in 1880,“It is not the pitiless operations of economic laws, but it is thoughtless and pitiless action of the British policy; it is pitiless eating of India’s substance in India and further pitiless drain to England, in short it is pitiless perversion of Economic Laws by the sad bleeding to which India is subjected, that is destroying India.” On the footsteps of Dadabhai Naoroji, R. C. Dutt also promoted the same theory by keeping it as a major theme of his book Economic History in India.

Drain of Wealth by British

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John Sullivan, President of the Board of Revenue, Madras, had wrote—”Our system acts very much like a sponge, drawing up all the good things from the banks of the Ganges, and squeezing them down on the banks of the Thames.”

Drain of Wealth by British

• In the year 1853, before he wrote the Das capital, Karl

Marx wrote couple

• f

articles which showed his understanding about India. He said that economically if you look at the country, every village is an economic unit, a tariff unit, and it doesn’t import or export anything. It produces and consumes making the producer the consumer as well and there is no economic inequality because no one has any power over others. This was called the primitive socialism in the communist terminology.

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Marx and Max Weber on India

• But Marx said there was something very wrong with this

society- they worshiped monkeys, and cows. He considered man as ‘the sovereign

• f

nature’, and accuses Hindus of degrading that man by ‘worship of nature’. Thus, such a backward society can never progress and carry out a revolution which is necessary for the advancement of human race.

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• It is necessary to destroy the social base and even

though it is a painful destruction, it is a pleasurable destruction as well. This is what Karl Marx said. He never came to India, never read any Indian literature, never met any Indian but he wrote about India. And Marx became one of the most powerful thinkers influencing the Indian intellectual establishment. And our academics are still under the grip of these powerful thoughts.

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• Western anthropology is founded on methodological

individualism which delegitimises all relations even family ties

• Another person, Max Weber, a German philosopher is

less known but he was a more powerful social thinker. In 1925 Max Weber wrote a book on Hinduism and

• Buddhism. He said that two societies can never come

up- China and India, because they believe in Karma and rebirth, which is anti-enterprise, anti-entrepreneurial development, and so these two nations can never develop……

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But a remarkable u-turn took place in 1970s, when Japan began rising as an economic power. The west was surprised, because economic development, economic progress is supposed to be the preserve of the west. How could Japan, a Buddhist country from Asia, develop?

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Studies have shown that two great thought leaders of the West, Karl Marx and Max Weber, neither of whom ever visited India, have and still continue to exert dominant influence on Indian thinking on sociology and economic

• development. Take Weber first. Modern West is rooted in

Weber’s concept of methodological individualism that saw society as a collection of individuals, rather than individuals as components of the society.

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While communism believed in social engineering through revolution and state, capitalism trusted the efficient market hypothesis based

• n

methodological individualism to achieve the very end. Scholars like Karl Popper said there was “no such thing as society”. Traditional society was seen as an impediment to individualism that produced entrepreneurs who disturbed static societies and turned them dynamic. Weber also believed that Catholic-Hindu- Buddhist cultures discouraged individualism and hence lacked entrepreneurial spirit, whereas Protestantism encouraged both. He added that belief in karma, rebirth and caste-base made Hindu-Buddhist culture inappropriate for modern capitalism.

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Indians, mostly defined themselves through Karl Marx, through Max Weber, and then came Professor Raj Krishna. He was asked in 1978, “why India is growing so slowly?” He said it is the ‘Hindu rate of growth’. Actually it was socialistic rate of growth.

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